HR Policy raised concerns that, due to the “ambiguity and lack of uniformity” in various circuit court tests for joint employer status, the DOL “should include language that ensures all employers are not at risk of joint employment liability based on participating in an AHP.”
The new rule is primarily targeted at small employers:
- Employers will more easily be able to band together to increase their economies of scale to offer fully-insured or self-insured health care benefits to their employees. Like large employer plans, AHPs will not be allowed to charge more or deny coverage to people with pre-existing conditions, and are not required to offer the ACA’s 10 essential health benefits.
- Self-employed workers with no employees will be allowed to take part in AHPs—a break from previous ERISA rules.
- Problematically, states will be allowed to regulate self-insured AHPs to the extent they are not inconsistent with ERISA, which may be an issue for large multi-state employers. The fiduciary requirements may need to be clarified as they are somewhat ambiguous.
- The DOL reserves the right under ERISA to preempt state insurance laws that go too far in regulating self-insured AHPs in ways that interfere with the important policy goals advanced by the final rule.
Outlook: If the final regulation survives a legal challenge that has been filed by the Massachusetts and New York attorneys general, the rules will be implemented in stages from September 1, 2018 to April 1, 2019. However, some “blue” states that are concerned about what impact AHPs may have on their individual markets have indicated they may place limitations on the plans.
Significance of joint employer language: Though the rule will primarily benefit small employers, the DOL's clarification of the joint employer liability issue is a positive sign of a new direction on this issue. The previous administration had adopted a far more expansive approach to joint employer liability, which affected employers of all sizes.